Entrepreneurs are considering selling their businesses before April to avoid the hike in CGT, a survey has found.
The CBI curvey of business leaders reveals that 41% were considering the move.
The survey also reveals proposed changes by chancellor Alistair Darling to the Capital Gains Tax (CGT) fail to convince a majority of 63% of respondents they are a ‘desirable simplification’.
Instead, the proposals are already holding back future business plans – 43% having changed their plans to invest in new business and 36% now unwilling to invest in existing business.
The survey revealed 40% of SMEs found the proposed CGT changes already had a negative impact on their business. This response increased to 57% for business leaders holding equity in their business for more than 10 years, who accounted for 61%.
The three main elements of the proposed CGT changes – the abolition of taper relief, the change in the marginal rate and the abolition of indexation relief – were regarded as key issues, particularly for those with an equity stake. The survey showed a sharp spike of concern about taper relief as 85% of those who said CGT changes were ‘very negative’, cited taper relief as ‘highly important’.
John Cridland, CBI deputy director-general, said the government's standing with business had been ‘sorely undermined’. ‘Entrepreneurs are now less inclined to do what they do best - taking risks, investing in ideas and driving the economy forward,’ he said.
Further reading:
Business 'more angry than ever before' over CGT
Comments